The Human Fund: Money forPeople
December 15, 2009 by Regan Wolfrom
George Costanza was a visionary, despite being a fictional character based on Larry David. Well, in truth, I just wanted a name to describe a concept, and most names are taken. Even The Human Fund is taken, by an organization in Cleveland. But that didn’t stop me…
So here’s the pitch: many of us who frequent blogs are idealists who hope for a better society, whether our focus is on local issues or on global affairs. Some of us donate money to various causes, while others feel as though charities are simply “in the business of charity”, worrying that the administration and salaries might be taking too much of the donation money.
As an East Kildonan Lion, I know first-hand that there are charities that are truly working to help the communities they work in; Lions, for instance, do not spend any proceeds on administration costs, which means that all of the money from fundraising and donations goes directly to worthy causes, and not to salaries or awards dinners. I’ve also seen the work that groups like the United Way and Siloam Mission are doing in Winnipeg, and they are worthy causes.
But there are other projects that I feel would benefit Winnipeg, and they don’t always fall under the auspices of charity in the traditional sense. Some of these projects are on a line between charity and angel investing, because they are near a break-even point economically, so may not be considered viable enough for standard capital or not-for-profit enough for donations.
One of these projects is the Grassroots Apartments Project I talked about in an earlier post. Another idea that I might write about in future is Youth Cafés. Either of these projects, if they could be given a solid business plan, could receive capital from a rag-tag assortment of Winnipeggers who want to see some of their spare change used to enhance the build environment of our city. This same concept could be extended to provincial, federal, or worldwide issues, whether it’s money for a prorotype of an algae biofuel plant or a little bit of cash to research the effect of Martian gravity on the development of embryos in mammals in anticipation of building a settlement on Mars.
If any of these projects sound good, great; if any of these projects sound incredibly stupid, that’s good too. Because I believe that there is room for a fund that allows its investors (or sometimes more accurately, its benefactors) to pick and choose which projects to invest in. This would be handled through a website that lists all projects once approved by a volunteer committee. The benefactors would be able to choose the projects to invest their funds in, based on the type of project and its apparent viability.
Some benefactors may choose to automate their investment choices, while others would choose manually on a project-by-project basis. Some projects could be donations to other charities, while others could be microloans to local entrepreneurs. It would possible for one benefactor to treat the fund solely as a place to donate money, while another benefactor would use the fund as a way to earn back a small income from projects they deem worthy and viable.
This type of project could be started immediately with the creation of a website and a not-for-profit organization. Rather than making donations in an official sense, participants would be purchasing virtual goods. These virtual goods would be traded to various projects, where the executives of that project would borrow money from the organization using the virtual goods as collateral (often along with other guarantees), or they would sell the goods to the organization outright (in the case of a donation); it would also be possible for the organization to enable shared ownership of a portion of a for-profit project by a project’s benefactors, similar to buying shares.
If a project executive failed to repay a loan, the organization would use conventional means of collection to retrieve the funds. All funds recovered would be distributed back to benefactors, and all dividends from shared ownership would be distributed as well. All benefactors would be able to withdraw their funds at any time when their funds are not committed to a project.
So is this a worthy endeavour? Is it something that could be made to work, avoiding both fraud and over-complexity? Does anyone have any thoughts on this?
Recommend this Post on Progressive Bloggers